Executive Summary
In today’s hyperconnected world, software supply chain risk is business risk. Nowhere is this more visible, or more consequential, than in the insurance sector. As ransomware, supply chain breaches, and regulatory scrutiny rise, insurers are re-evaluating the data, practices, and standards they rely on to underwrite digital risk.
Software Bills of Materials (SBOMs) – the formal, shareable inventory of all components in a software product, have rapidly become the linchpin for this new era of risk assessment and management.
But for SBOMs to fulfill their promise for insurance, they must be more than a compliance checkbox. They must be actionable, shareable, standardized, and woven into the very fabric of policy issuance, claims analysis, and incident response. In this article, we explore why SBOMs matter for insurance, how the industry can operationalize them, and what the path forward looks like for all stakeholders.
Introduction: Why Insurance Needs SBOMs Now
Cyber-insurance is at a crossroads. The frequency and cost of software supply chain attacks, think SolarWinds, Kaseya, Log4Shell, have exploded. At the same time, regulatory frameworks like the U.S. Executive Order 14028, EU NIS2 Directive, and growing customer expectations have put the spotlight on supply chain transparency. Insurance carriers, for their part, are struggling to price risk accurately, enforce better software hygiene, and avoid catastrophic aggregate losses.
Enter the Software Bill of Materials (SBOM). Much like a nutrition label for software, an SBOM provides a structured list of every component, library, and dependency that makes up a product or service. For insurers, SBOMs offer:
- A fact-based foundation for risk modeling and premium pricing
- An evidence trail for claims adjudication and breach analysis
- A tool for enforcing compliance and incentivizing better security practices
But to get there, insurers and their customers need to move beyond just generating SBOMs, they need to make SBOMs actionable, reliable, and shareable across organizational and technical boundaries.
SBOM Basics: Foundations of Supply Chain Transparency
Before we dive deeper, let’s clarify: What exactly is an SBOM?
An SBOM (Software Bill of Materials) is a formal record containing the details and supply chain relationships of components used in building software. This includes:
- Open source libraries (e.g., OpenSSL, Log4j)
- Third-party components
- In-house developed modules
- Direct and transitive dependencies
Key SBOM attributes:
- Component name and version
- Supplier or origin
- Cryptographic hashes (integrity)
- Licensing information
- Dependency relationships
Why are SBOMs important?
- Transparency: Know what’s really in your software.
- Vulnerability Management: Identify and mitigate known flaws (CVEs).
- Compliance: Meet regulatory and customer mandates.
- Incident Response: Rapidly assess exposure during new zero-days or breaches.
SBOM Standards
The SBOM ecosystem is maturing quickly. Key standards include:
- SPDX (Software Package Data Exchange): Used by major vendors and open source projects.
- CycloneDX: Focused on application security, adopted by OWASP and widely used for cloud-native and SaaS.
- SWID (Software Identification Tags): Used in some enterprise contexts.
The goal: Interoperability and automation for both producers and consumers of SBOMs.
The Rise of Supply Chain Attacks and the Insurance Fallout
Software supply chains are now a preferred target for attackers. Here’s why:
- Proliferation of dependencies: Modern software can contain hundreds or thousands of third-party components.
- Lack of visibility: Many organizations don’t know all the components in their own applications.
- Transitive risk: A vulnerability in a sub-component can expose an entire application or network.
Notable incidents:
- SolarWinds (2020): Attackers inserted malicious code into a software update, impacting thousands of organizations.
- Log4Shell (2021): A critical flaw in a ubiquitous open source logging library triggered global incident response.
- Kaseya (2021): A software update mechanism was weaponized to distribute ransomware.
Insurance impact:
- Massive claims payouts
- Rising premiums or exclusions for “silent cyber” risks
- Difficulty in modeling systemic risk and “cascade” effects across multiple insureds
SBOMs promise to break this cycle, by providing the raw data insurers need to quantify, mitigate, and respond to software supply chain exposures.
SBOMs in Action: Making Software Inventories Useful for Insurance
Beyond the Checkbox
Historically, many organizations treated SBOMs as a compliance checkbox: “generate and file away.” But for SBOMs to matter in insurance, they must be living, breathing documents that are:
- Continuously updated as software evolves
- Verifiable (attested and signed)
- Machine-readable for automated ingestion and analysis
- Shareable across entities (customers, auditors, underwriters, incident responders)
Insurers don’t want a pile of PDFs. They want a dynamic, API-driven feed of what’s running where, what’s vulnerable, and how it maps to their risk models.
Key Insurance Use Cases
- Risk Assessment & Underwriting: Automated review of SBOMs to identify exposure to high-risk components (e.g., outdated OpenSSL).
- Policy Enforcement: Requiring certain SBOM hygiene as a precondition for coverage (e.g., only using supported libraries).
- Claims Analysis: Post-incident, rapidly mapping breached systems to vulnerable SBOM components.
- Portfolio Management: Aggregating SBOM data across insureds to spot systemic risk and improve modeling.
The Case for Sharing: Why SBOMs Must Move Beyond Compliance
SBOMs only realize their value when shared. Keeping SBOMs siloed within organizations severely limits their effectiveness for risk management – especially in the insurance context.
Why is SBOM sharing essential for insurance?
- Insurers need access: To assess risk, set premiums, and evaluate claims, insurers need timely, accurate SBOM data from customers.
- Regulators require transparency: Compliance regimes increasingly demand evidence of supply chain due diligence, which requires sharing SBOMs across the ecosystem.
- Customers demand proof: Enterprises buying cyber-insurance want to see that their vendors and themselves are managing software risk proactively.
Key enabling trends:
- New SBOM standards (CycloneDX 1.6, SPDX, etc.) that support machine-readable sharing and attestation
- CISA working groups and guidance focused on SBOM sharing roles, best practices, and policy frameworks
Risk, Disclosure, and Data Sharing: The Insurance Perspective
Objections to SBOM sharing often revolve around the perceived risk to intellectual property (IP) and the fear of arming attackers or competitors. Some common concerns:
- IP leakage: Revealing too much about internal code or proprietary approaches
- Attack surface disclosure: Helping adversaries find “weak links” in critical infrastructure
The Risk Management View
Forward-thinking experts and insurers urge a risk management, not risk avoidance approach:
- IP risk is often overstated: Most attackers already have other ways to discover vulnerabilities; contracts and legal frameworks protect IP.
- Zero-day risk is ever-present: Attackers don’t need SBOMs to find vulnerabilities; defenders do need SBOMs to mitigate them.
- Time-to-remediation matters: Rapid SBOM-driven response can dramatically reduce incident costs – crucial for insurers.
Insurance as a Catalyst for Change
The insurance industry is uniquely positioned to drive SBOM sharing through policy requirements and market incentives:
- Premium incentives: Lower premiums for organizations providing verifiable, up-to-date SBOMs.
- Exclusions: Denial of claims or coverage if basic SBOM hygiene is not maintained.
- Portfolio transparency: Insurers can more accurately aggregate and model risk, reducing catastrophic exposure.
SBOM Standardization: From Chaos to Clarity
One of the biggest challenges for actionable, shareable SBOMs is standardization, both in format and content.
Current SBOM Standards
- SPDX: Backed by the Linux Foundation, used by many large enterprises.
- CycloneDX: Rapidly gaining ground, particularly in cloud-native and security contexts.
- SWID: Used for certain compliance regimes.
Each standard defines schemas for:
- Component identification
- Dependency relationships
- Vulnerability mapping
- Licensing information
But… Component identification remains a major pain point. Multiple naming schemes (PURL, CPE, etc.), inconsistent versioning, and missing metadata hinder automated risk analysis.
Why Standardization Matters for Insurance
- Automated ingestion: Insurers need to parse SBOMs at scale.
- Cross-portfolio analytics: Consistent data enables portfolio-wide risk modeling.
- Claims validation: Disputes hinge on the accuracy and granularity of SBOM data.
Industry Initiatives
- OWASP CycloneDX Attestations (CDXA): Machine-readable, signed attestations for SBOM authenticity.
- CISA SBOM Sharing Primer: Guidance on sharing roles, content, and best practices.
Insurers, customers, and vendors must participate in these standards efforts to ensure SBOMs meet real-world risk and compliance needs.
Policy, Automation, and Attestation: Making SBOMs Work for Insurance
For SBOMs to deliver value to insurers, policy automation and trust are key.
Automated Policy Enforcement
- Access management: Define who can see what, when, and under what circumstances.
- Conditional sharing: Grant SBOM access based on policy triggers (e.g., incident, renewal, compliance audit).
- Dynamic content: Different SBOM views for different stakeholders (e.g., redacted for public, full for insurer).
Attestation and Verification
- Cryptographic signing: Ensures SBOMs are authentic and untampered.
- Traceability: Track who shared what, when, and with whom (potential for blockchain/DLT usage).
- Third-party distributors: Brokers that facilitate SBOM sharing, validation, and policy enforcement.
Insurance Example
A cyber-insurer may require:
- A signed, machine-readable SBOM for every critical application in scope.
- Proof that all components are checked against the National Vulnerability Database (NVD) weekly.
- Notification within 24 hours if a high-severity CVE is detected in any component.
Automating these processes is essential for scale and accuracy and the only way insurers can realistically operationalize SBOM requirements across thousands of policies.
Practical Insurance Use Cases for SBOMs
1. Underwriting and Premium Setting
Insurers can analyze submitted SBOMs to:
- Quantify exposure to high-profile vulnerabilities (e.g., OpenSSL, Log4j)
- Flag unsupported or end-of-life components
- Incentivize better hygiene (e.g., premium discounts for up-to-date SBOMs)
2. Breach Response and Claims Adjudication
After an incident, claims handlers can:
- Quickly determine if a known-vulnerable component was present
- Validate customer claims about software versions and patch status
- Speed up incident response and root-cause analysis
3. Regulatory Compliance
Many regulations (NIS2, EO 14028, FDA for medical devices) now mandate software transparency and vulnerability management. Insurers can:
- Help customers meet requirements (by mandating SBOMs in coverage)
- Reduce their own exposure to regulatory fines or litigation
4. Aggregation and Catastrophe Modeling
Insurers and reinsurers can:
- Aggregate SBOM data across their portfolios
- Model systemic risk (e.g., “How many insureds run Log4j?”)
- Improve capital allocation and risk transfer strategies
5. Supply Chain Transparency
Insurance brokers and syndicates can use SBOMs to:
- Assess third-party risk in complex value chains
- Offer tailored products for high-risk industries (healthcare, critical infrastructure, SaaS providers)
Challenges and Roadblocks: What Insurers and Enterprises Must Know
1. Intellectual Property and Confidentiality
- Mitigation: Use role-based access control, attestation, and redacted SBOMs for different audiences.
2. Technical Complexity
- Mitigation: Standardize SBOM formats, automate parsing/analysis, and use trusted distributors.
3. Cultural Resistance
- Mitigation: Incentivize SBOM adoption via insurance premium discounts, regulatory support, and customer demand.
4. Ecosystem Maturity
- Mitigation: Insurers, vendors, and standards bodies must collaborate to refine SBOM best practices, tooling, and policy frameworks.
The Future: SBOMs as a Prerequisite for Cyber-Insurance
Industry experts agree: SBOMs will soon be as fundamental to cyber-insurance as property surveys are to fire insurance.
Trends to Watch
- SBOM-first policies: Insurers only write coverage if customers provide up-to-date, verifiable SBOMs.
- Continuous risk monitoring: SBOM feeds enable real-time risk scoring and premium adjustments.
- Third-party SBOM repositories: Secure marketplaces/distributors that manage sharing, access, and attestation.
- Automated policy enforcement: Smart contracts or blockchain-backed systems to enforce SBOM sharing and updates.
The Big Picture
SBOMs, when shared and operationalized, can move the insurance industry from reactive to proactive risk management reducing claims, improving pricing, and ultimately driving a more secure software ecosystem.
How LabradorLabs Makes SBOMs Actionable
At LabradorLabs, we understand that an SBOM is only as valuable as the actions you can take with it. Our platform is built for real-world supply chain security – enabling insurers, enterprises, and vendors to move from static SBOMs to dynamic, actionable insight.
What Sets LabradorLabs Apart?
- Automated SBOM Ingestion & Analysis: We support all leading SBOM formats (CycloneDX, SPDX, SWID), with seamless integration into CI/CD pipelines and third-party risk platforms.
- Continuous Vulnerability Monitoring: Our platform cross-references SBOMs against up-to-date threat intelligence (NVD, vendor advisories, exploit databases), alerting you to new risks in real time.
- Custom Policy & Sharing Frameworks: Role-based access controls, signed attestations, and integration with insurance workflows ensure your SBOMs are as secure as your software.
- Insurance-ready Reporting: Generate machine-readable, standardized SBOMs on demand – ready for insurer review, regulatory compliance, or customer assurance.
- Supply Chain Transparency at Scale: Aggregate, correlate, and visualize SBOM data across your portfolio or vendor network for a holistic view of risk.
Ready to make SBOMs a cornerstone of your risk management and insurance strategy? Contact LabradorLabs for a demo or free consultation.
Toward a More Secure, Insurable Software World
The convergence of escalating cyber risk, regulatory scrutiny, and insurance industry pressure has made SBOMs an unavoidable reality. But simply generating SBOMs isn’t enough. To truly secure the digital supply chain – and create a sustainable cyber-insurance market – SBOMs must be actionable, shareable, and trustworthy.
Insurers, enterprises, and vendors all stand to benefit from this new era of transparency, provided they embrace best practices around SBOM sharing, policy automation, and collaborative risk management. With the right platforms and standards in place, SBOMs will empower organizations not just to survive, but to thrive, in a world where software is the foundation of everything we do.